2025 has seen a sharp rise in lawsuits targeting IT services and consulting companies, which now increasingly offer proprietary digital platforms and cloud services.
The US remains the largest market for IT outsourcing, and for Indian giants TCS, Infosys and Wipro, it contributes around 40 per cent of their top line.
With demand for information-technology (IT) services in North America still sluggish, Europe has become a source of optimism for Indian companies because it is delivering steady gains over the past two years and continuing to outperform in the latest quarter. Yet analysts caution a full-scale revival will require a rebound in the United States (US), particularly in manufacturing, retail, and BFSI (banking, financial services, and insurance), because Europe contributes only about a third of the revenues.
Mid-tier information-technology (IT) companies last financial year reported better growth numbers than their larger counterparts, highlighting their ability to navigate the uncertain macroeconomic environment. Most of these companies - such as Persistent Systems, Coforge, KPIT, and Mphasis - focus on niche businesses and industries that allow them to go deeper in terms of client mining and expanding wallet share from existing customers.
'The race is now on for Indian IT firms to develop their AI prowess and focus on a software-first approach to services as the people element becomes more complicated with Trump's expected new regulations.'
Krithi Krithivasan is the kind of person one might look to when the need is to calm things down and put things back on track.
Tata Consultancy Services (TCS) - the largest information technology (IT) services provider in India and the second-largest globally - recently set an ambitious goal of $50 billion in revenue by 2030. The growth required to reach this goal, however, is lower than the company's own standards. In the past decade, TCS revenues, or net sales in US dollar terms, have grown at a compound annual growth rate (CAGR) of 9.5 per cent, from $10.2 in 2011-12, to an expected $25.3 billion during 2021-22 (FY22), based on its revenue trend in the first nine months of FY22.
According to outsourcing advisors and experts, while almost half of the deals are likely to see delay, the others are expected to be renewed at a lower price as enterprises ask for discounts in roll-over contracts.
Stock market crash: TCS sheds $21 billion in market capitalisation, Infosys $7 billion and Wipro around $3 billion
To be able to manage any such uptick, Indian IT services players are hiring more locals, and relying on hybrid work models.
The second quarter of FY22 continued to show double digit growth for the top four IT services providers, with every vertical and geography growing well, even though the total contract value (TCV) looked soft for all the players. The trend was first evident in Accenture's Q4 numbers, which saw its TCV in outsourcing deals softer. A soft TCV does not mean that growth is declining, but it does point to the trend of few and scarcer mega deals.
Around 1,680 deals worth over $80 billion will be renewed next year. Among Indian vendors, Infosys, TCS, and HCL Technologies are better placed to see a higher growth rate in 2020.
While for clients it has led to increased outsourcing, they are no more worried about which shore the service providers are executing the project in - offshore, onshore or near-shore - because remote working has become the standard norm in the industry, giving rise to a "no shore" kind of model.
Clients are seen realigning their tech strategy by moving works from own captives to third-party service providers which is mostly benefiting to large companies such as Infosys, TCS, Wipro or HCL Technologies.
Tepid growth in verticals like banking and finance, healthcare, retail and automotive will drag overall IT spends in the current year, reports Debasis Mohapatra.
The analyst community tracking the Indian IT services industry took special note of Accenture's first quarter (Q1) performance, which showcased the rapid growth of its consulting business that outperformed its outsourcing business. Bookings indicate that the trend will continue. Consulting bookings increased 41.6 per cent year-on-year (yoy) to $9.4 billion, higher than the 17.6 per cent growth in outsourcing to $7.4 billion. The management commentary was also more bullish on the consulting business.
In March this year, when Tata Consultancy Services (TCS) unveiled a new brand statement of "Building on Belief", many wondered if it was the right strategy. When things are uncertain, wouldn't a brand statement such as "Experience Certainty" have been better? But for Rajesh Gopinathan, CEO & MD, TCS, it was all about the way the company was looking at business. As Gopinathan explained over a video call, "Today, we have over 1,000 customers and 98 per cent of our business is repeat business; our relevance to customers should continue, and to increase.
As more and more businesses move towards digital technology-enabled solutions such as chatbots to increase interaction with their own customers, BPM companies have seen a significant chunk of their revenue proceeds shifting towards business outcomes.
The IT services company is building underlying tech for connected cars
It had reorganised its India business by carving out public sector undertaking and government businesses. Besides the company had also split its India and West Asia businesses.
Considering the June quarter numbers have been softer, as compared to the past quarters, and the overall macro environment is yet again under a cloud, Indian IT services should seriously look at the new normal
Despite higher gross additions, growth in overall customer base has been tepid for these companies, says Debasis Mohapatra.
2019, however, will be a bigger test as the firm continues to deal with rising attrition and margin pressure.
The contract has not only cemented the position of its chief executive officer (CEO) Abidali Neemuchwala, it has also proven the ability of the current management to successfully chase and close larger deals that are becoming scarcer in the market.
India's software industry mounts two-pronged campaign to tackle Trump administration. Ayan Pramanik & Karan Choudhury report.
5,565 contracts, valued at $201 billion are up for rebids across geographies and verticals by 2018.
Building front-end and stitching it with back-end is a task that IT firms are learning the hard way, finds Raghu Krishnan.
Wipro said recently it was expecting its revenue growth to drop 2.33 per cent or stay flat between $2,015 and $2065 million.
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'The industry growth in 2016< came from the new digital technology segment which grew at over 20%.' 'The challenge for the industry is that the legacy business makes up almost 80% of revenue.' 'Hence the urgency to transform into digital business.'
Investors will look at how TCS has performed when it announces the quarter's results on October 13, and the forecast from Infosys on October 14
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Analysts say the impact on Indian entities would not be immediate
TCS is tapping an emerging opportunity called IT modernisation, which potentially could be a growth driver for the entire IT services industry for the next two to three years, says Raghu Krishnan.
Under Neemuchwala's digital-first vision, Wipro has accelerated investments in automation, analytics, cloud and cognitive technologies over the past three years, says Ayan Pramanik.
The strategy of returning cash to shareholders through stock purchases could hinder their digital expansion plans
Sikka has influenced the company to break away from the old mould in more ways than one.
Amid headwinds across global markets, US issues fresh restrictions on H-1B visas. Ayan Pramanik & Raghu Krishnan list out the many ways in which this impacts the Indian IT industry.
The route to that target is clear in Sikka's mind.
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